Despite efforts in other industries to ban class actions through arbitration agreements, the securities industry historically has taken a different path. It generally demands that individual cases be arbitrated under pre-dispute arbitration agreements, but allows class actions to go forward in court. See, for instance, FINRA Code of Arbitration Procedure, sec. 12204. That policy is more important than ever because, when defendants demand it, class action bans laundered through pre-dispute arbitration clauses are likely to be enforced under the Supreme Court's decision in AT&T v. Concepcion.
But check out this article by law professor Hal Scott and lawyer Leslie Silverman urging that securities class actions should be governed by Concepcion. They begin by explaining that
Last month, the Securities and Exchange Commission rejected attempts by the Carlyle Group, and proposals by stockholders of Pfizer and Gannett, to mandate arbitration rather than litigation in disputes between investors and management. The SEC gave no explanation for its action on Carlyle (related to an upcoming public offering), and it said opaquely the Pfizer and Gannett proposals might violate the securities laws.
But this issue isn't going to go away. Scott and Silverman argue that
[s]ecurities class actions undercut the competitiveness of the U.S. capital markets. Plaintiffs attorneys have demonstrated a clear tendency to target the largest public companies, and because insurance firms will not provide settlement coverage over a few hundred million dollars, public companies face substantial risk. Further, foreign corporations are reluctant to list and trade here, while private U.S. corporations have grown wary of going public.
If these arguments are not met on their merits securities class actions could become a thing of the past.